Triumph Financial CEO on Freight Credit Risk

In an interview with FreightWaves, Triumph Financial CEO Aaron Graft discusses freight credit risk in 2024. Despite the brokerage model being characterized as under siege, data from Triumph Financial's Mile Marker report indicates that brokers generating over $100 million annually have grown their volume by 15% YoY, while those between $10-50 million in annual revenue have seen margin gains of 37%. Graft attributes smaller brokers' margin gains to their positioning in the spot market and relationships with SMEs.

Graft also notes that new carrier formation has stalled, with more drivers staying put due to heightened compliance requirements, insurance scrutiny, and difficulties in obtaining operating authority. Barriers such as CDL enforcement, English proficiency rules, and ELD compliance are making it harder to launch a new carrier. This stall in carrier formation means that the traditional relief valve that eases capacity tightness when demand rises is no longer functioning.

Carrier sign-ups in Triumph Financial's factoring and payments network have increased, even as the broader market sheds capacity. Graft theorizes that much of the exiting capacity relied on broker quick pays, which have lower onboarding requirements than traditional factoring. The cost of filling a single truck with diesel now stands at approximately $2,000, and carriers unable to access working capital to cover this expense are sitting idle even when freight rates cover their full operating costs.

Graft also addresses the immigration enforcement environment, expressing concern over the impact on fully documented Latino drivers who are opting out of trucking due to fear of detention. He believes that while this situation is disruptive, federal enforcement currently operates with a "broadsword" approach rather than a precision scalpel, affecting both needed and legal operators.

Both Graft and the interviewee agree that this freight cycle is likely to run longer than previous ones, with fewer natural release valves available to quickly restore capacity.